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MeneameCopper can still enjoy upward momentum after hitting its highest price in more than four months on January 27 at US$3.905/lb, UK-based investment bank Barclays Capital analyst Nicholas Snowdon told BNamericas.
"Looking at the big picture, the copper market will be in another deficit in 2012 and as such we will see a record level of tightness. Due to this, we see prices averaging US$$9,000/t for the year as a whole. So they are still constructive even at current levels," Snowdon said.
However, in the near term there are enough reasons for believing Chinese import demand will temporarily soften from 4Q11 levels as a result of weaker price spreads, lower physical premiums, and rising SHFE and bonded warehouse stocks, according to the analyst.
"All these factors together point to softer, mild surplus conditions in early 2012. Given a moderation in Chinese GDP growth is expected in this quarter combined with likely softer import demand, a period of consolidation in copper prices appears justified," Snowdon said.
"However, we anticipate Chinese GDP growth to pick up again from 2Q12 onwards and this should support a reinvigoration in import levels," he added.
Copper closed Tuesday at US$3.849/lb cash on the LME.
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